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1998 Supreme(Mad) 879
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE T. MEENAKUMARI
MADRAS ALUMINIUM CO.
Versus
REGIONAL LABOUR COMMISSIONER
W.P.Appeal No.6446 of 1989
Decided On : 01-07-1998
The provisions of Section 25-FF of the Industrial Disputes Act do not apply in the absence of a transfer of ownership or management of an undertaking, and the principal employer is not under an obligation to absorb employees whose contract labour system stood abolished.
Headnote:
CONTRACT LABOUR - PAYMENT OF GRATUITY - ABSORPTION OF CONTRACT LABOUR - APPLICABILITY OF SECTION 25-FF OF THE INDUSTRIAL DISPUTES ACT - INTERPRETATION - ABSENCE OF TRANSFER OF OWNERSHIP OR MANAGEMENT OF UNDERTAKING - NO EXPRESS PROVISION FOR ABSORPTION OF EMPLOYEES WHOSE CONTRACT LABOUR SYSTEM STOOD ABOLISHED - PRINCIPAL EMPLOYER NOT UNDER OBLIGATION TO ABSORB EMPLOYEES FROM THE DATE OF EMPLOYMENT BY CONTRACTOR - GRATUITY PAYABLE FROM DATE OF APPOINTMENT IN THE COMPANY.
Fact of the Case:
The petitioner company engaged in the manufacture of Aluminium and Aluminium products, took up on lease Bauxite Mines at Yercaud. The petitioner company registered itself as the principal employer under the Contract Labour (Regulation and Abolition) Act. The third respondent was employed by a contractor who was supplying labour to the petitioner's mines. The third respondent served under the contractor until December 31, 1977, and was taken into the direct employment of the petitioner with effect from January 1, 1978, retiring on March 29, 1985. He applied for gratuity, claiming a sum that included his service under the contractor. The petitioner declined to entertain his claim for the period of service not rendered to the petitioner. The third respondent filed an application before the second respondent, who held that the petitioner was liable to pay the gratuity amount due to the third respondent. The petitioner appealed to the first respondent, who confirmed the order of the second respondent, holding that under Section 25-FF of the Industrial Disputes Act, the petitioner was liable to pay the third respondent all service benefits without discrimination, including those pertaining to the period of service rendered under the contractor.
Finding of the Court:
The court found that there was no transfer of ownership or management of an undertaking either by agreement or by operation of law, and that the appellate authority erred in applying the provisions of Section 25-FF of the Industrial Disputes Act. The court also found that there is no express provision in the Contract Labour (Regulation and Abolition) Act for the absorption of employees whose contract labour system stood abolished by way of publication of notification under Section 10(1) of the Act, and that the principal employer is not under an obligation to absorb the employees whose contract labour system stood abolished.
Issues: 1. Whether the provisions of Section 25-FF of the Industrial Disputes Act apply in the absence of a transfer of ownership or management of an undertaking? 2. Whether the principal employer is under an obligation to absorb employees whose contract labour system stood abolished?
Ratio Decidendi: 1. Section 25-FF of the Industrial Disputes Act applies only where there is a transfer of ownership or management of an undertaking, which was not the case in the present matter. 2. There is no express provision in the Contract Labour (Regulation and Abolition) Act for the absorption of employees whose contract labour system stood abolished, and the principal employer is not under an obligation to absorb such employees.
Final Decision: The court set aside the orders of the second and first respondents and directed the petitioner to pay the gratuity from January 1, 1978, to March 29, 1985, after adjusting the amount already deposited in pursuance of interim orders, together with interest at the rate of 12% per annum, within four weeks from the date of receipt of the order.
T. MEENAKUMAR, J.
( 1 ) THIS writ petition is filed seeking for the issue of a writ of certiorai calling for the records of the first respondent in Gratuity Appeal No. 6 of 1987 and quash the order of the first respondent dated March 13, 1989.
( 2 ) THE case of the petitioner Company is that it is engaged in the manufacture of Aluminium and Aluminium products. The petitioner Company has taken up on lease Bauxite Mines at Yercaud, The petitioner Company has got itself registered as principal employer under the provisions of the Contract Labour (Regulation and Abolition) Act. (herein after referred to as the act), The contractors were engaging their own men for attending to work in connection with the execution of the contract and they had also taken out licences under the Act. It is also the case of the petitioner that the third respondent was employed by a contractor R. Raghupathy who was supplying labour to the petitioner mines at Yercaud. The third respondent served under the contractor R. Raghupathy upto December 31, 1977. The third respondent was taken in the direct employment of the petitioner with effect from January 1, 1978. He retired from the services of the petitioner on March 29, 1985. In view of his retirement, he submitted an application for gratuity in Form-I to the petitioner claiming a sum of Rs. 9746. 10 which was calculated taking into account his service under the contractor R. Raghupathy. The petitioner declined to entertain his claim with regard to the amount of gratuity for the period of service not rendered to the petitioner. The third respondent preferred an application to the second respondent in P. G. Case No. 2/86 claiming gratuity of Rs. 9746. 10. The petitioner filed its counter statement before the second respondent. However, the second respondent by order dated January 28, 1987 held that the contract between the petitioner and the contractor Raghupathy would not be a legal bar for the claim of the third respondent, that the contractor R. Raghupathy was merely a middleman, that without any written contract of service, it could be only understood and taken for granted that the petitioner would be liable to pay dues of the past services of the third respondent. By the said order, the petitioner was directed to pay a sum of Rs. 9,172. 80 as the gratuity amount due to the third respondent. Against the order of the second respondent dated June 28, 1987 the petitioner preferred an appeal under Section 7 (7) of the Payment of Gratuity Act before the first respondent. The first respondent by his order dated March 13, 1989 confirmed the order of the second respondent holding that under Section 25-FF of the Industrial Disputes Act, the petitioner is liable to pay the third respondent all service benefits without any discrimination including the benefits pertaining to the period of service rendered under the contractor. In the present writ petition, the orders passed by the first respondent confirming the orders of the second respondent are questioned.
( 3 ) THE learned counsel appearing on behalf of the petitioner has contended that the third respondent was employed under the contractor during the period August 19, 1968 to December 31, 1977, thereafter he was given a fresh employment effective from January 1, 1978 and he retired on March 29, 1985. He has also further contended that the services rendered by third respondent from August 19, 1968 to December 31, 1977 should not have been taken into consideration for payment of the gratuity by both the authorities as the petitioner Company has given a fresh appointment with effect from January 1, 1978, and the third respondent is entitled to receive the gratuity only for that period. It is also contended that the appellate authority should not have confirmed the orders passed by the second respondent applying the provisions of Section 25-FF of the Industrial Disputes Act. He has also further contended that the provisions of Section 25-FF will not ap
